DEFINITION: The phrase “regulatory capture” refers to the phenomenon of a government regulatory agency—or one or more its individual officers—coming under the influence of the corporate or other private entity it is charged to regulate.
ETYMOLOGY: The adjective “regulatory,” as well as the related noun “regulation” and verb “regulate,” derive, via Late Latin, from the classical Latin noun rēgula, meaning a “straight length,” a “ruler,” a “pattern,” a “model,” or a “rule.”
“Regulate” and its related forms entered the English language during the seventeenth century.
The word “capture” derives, via Middle French, from the Latin noun captūra, meaning a “capture of prey,” the “prey” itself, or “gain.”
Captūra, in turn, derives from the past participle captus, of the verb capio, capere, meaning “to take” or “to seize.”
USAGE: Regulatory capture is a deep-seated pathology of advanced liberal democracies.
While superficially akin to such openly criminal behavior as bribery, it often involves quid pro quos that are more subtle and hard to prosecute.
One of the most common forms of quid pro quo taken by modern regulatory capture is the so-called “revolving door” between the personnel of regulatory government agencies and the corporations they were formerly charged with regulating.
In other words, companies have subtle ways of signaling that, so long as they receive favorable treatment from an individual regulator, the latter will be welcome to join the company, or sit on its board of directors, when he or she retires from government service.
The economic subdiscipline of public choice theory studies regulatory capture and related pathological situations characteristic of modern governance.
The field offers persuasive reasons for understanding why such behavior occurs, as well as why it is extremely difficult to stamp out.